The Treasury has plans to extend public service agreements to health authorities and trusts, and the targets it sets may get tougher. Mark Crail reports

Public service agreements, under which the Treasury releases cash to spending departments in return for progress towards agreed targets, may be extended to individual health authorities and trusts.

Speaking at a Treasury select committee hearing last week, chief secretary Alan Milburn told MPs he wanted to ensure that 'each hospital and each school is clear about what is expected'.

He said: 'Heads must be on the block, and that applies not just to ministers but to named officials.'

Under the Department of Health's PSA, agreed when Mr Milburn was health minister, the NHS has 14 targets, including its 'manifesto commitment' to cut waiting lists by 100,000 from their May 1997 level by the end of the parliament.

It took a big step towards that last week when figures showed the number waiting to be just 15,000 above the target. But that may not be entirely good news for health secretary Frank Dobson. Mr Milburn warned that he would be keeping an eye 'on whether the targets have been appropriate, and whether we need to augment the targets or strengthen the targets'.

That could happen at any time, he said. Progress would be reviewed regularly by PSX - the Cabinet committee set up to deal with public spending issues. There would also be a fresh look at all targets during the next strategic spending review, 'and that will be next year'.

Asked whether staff development targets should be included in PSAs in future, he replied: 'That's something we can certainly look at.'

But he argued: 'I profoundly believe that actually it is right and proper that the policy decisions and the targets that flow from them are properly reserved for ministers. What you see then is that when a public service is set targets, the people who work in it and deliver the services respond to them.

'The government took a political decision to cut waiting lists, which was a subject of much controversy ...but it has been delivered because people have had a clear focus in the NHS that that was one of its key targets.'

In future, he said, PSAs were increasingly likely to be set across government departments.

'There is a good reason for that,' he told MPs. With agencies expected to work increasingly closely, people should experience their efforts as a single service.

Successful organisations, he promised, would experience 'less intervention'. He added: ''Success brings freedom' is the philosophy I want to see develop'.

It could also bring rewards. 'Beacon GPs, beacon hospitals, beacon hospital services can potentially get additional money,' Mr Milburn said.

'On the other side, where things are going wrong, local public services should understand that they have to account for that, and where they are going consistently wrong, government will take proper measures to deal with it.

'All too often the people at the bottom of the heap get the lousiest service. I don't think that's fair, and it is not something the government will allow to happen.'